I got Just a quick question about what happens when the market gaps open/down. I have seen it happen a couple times, such as today… When the market closed on Friday the Eur/Usd was around 1.2860, when it opened today (Sunday) it was around 1.2790. For you math majors out there that’s 70 pips. Now i have been told when the market gaps like that, it will ALWAYS close the gap, meaning the price will go back up to the previous non gap price, in this case that would be back up to 1.2860. I have been through the Babypips schooling and i did not see anything that mentioned gaping in the market. Is this true??? Does the gap have to close, or have i been misinformed?
This would be pretty close to that… though in forex they [I]may[/I] close roughly 90% of the time. In candlestick formations they are called windows that are open… and there fore must be closed. They are rare in forex but they do happen, when they do, it is usually on several/many pairs. Most of your standard bucket brokers close for the weekend but some of your much larger banks are “open” during the weekend. Wish I could remember the feed that you could see prices during the weekend… though not much volume and much larger spreads. (going to have to look for it as I am planning on demoing gaps for trading live)
Here are some reads over at Investopedia using the word "gap"
Gap
Playing The Gap
Your run of the mill retailing bucket shops aren’t really gaps. If you were to use a DBFX Demo account you can actually see the trading for most of the weekend. it’s just super erratic because of the low volume.
Think I am going to open a demo account and watch it… as I still plan on trading these gaps… I could at least, look say… really late on Sat night to see if I need to be around for the sunday open.